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Replacing old equipment at an immediate cost of $140,000 and an additional outlay of $20,000 five years from now will result in savings of $28,000
Replacing old equipment at an immediate cost of $140,000 and an additional outlay of $20,000 five years from now will result in savings of $28,000 per year for 8 years. The required rate of return is 9% compounded annually. Compute the net present value and determine if the investment should be accepted or rejected according to the net present value criterion.
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